JPMorgan Shareholders Still Absolutely Adore Jamie Dimon

NEW YORK (AP) — JPMorgan Chase CEO Jamie Dimon owned up to stock
analysts and went on TV to accept blame for a $2 billion trading
mistake. Next he faces shareholders, who are considerably less
wealthy since the blunder was disclosed.

While Dimon may be greeted by colorful protesters and tough
questions at the JPMorgan annual meeting in Tampa, Fla., on
Tuesday, shareholders are unlikely to call for his head.

For them, facing the crisis without Dimon might be a bigger
nightmare than the trading loss itself.

"When a bank is dealing with this sort of a challenge, you want
someone of his caliber to shepherd it through," said longtime
JPMorgan shareholder Michael Holland, chairman and founder of
money manager Holland & Co.

That has not been a universal opinion since Thursday, when Dimon
disclosed to analysts that the bank had lost $2 billion by making
a bad bet with so-called credit derivatives.

Investors lopped almost 10 percent off JPMorgan's stock price the
next day, and 3 percent more on Monday. Since Dimon made the
announcement, almost $20 billion in market value has evaporated.

And on Monday, White House press secretary Jay Carney, without
singling out Dimon, said that Washington can't prevent "bad
decisions being made on Wall Street."

He pointed out that it was the bank and its shareholders, not
bailout-weary taxpayers, who were suffering this time.

Dimon will be talking to shareholders from a position of weakness
for the first time. He has built a reputation as a cost-cutting
zealot and an expert at keeping risk under control.

He led JPMorgan into a stronger position than almost any other
bank after the 2008 financial crisis, which brought him more
praise than at any other time in his career.

Shareholders rarely lash out against Dimon. Vikram
Pandit of Citigroup and Brian
Moynihan of Bank
of America are not so fortunate: Shareholders at those banks
take the slightest opportunity to call for them to step down.

Dimon's reputation has been severely damaged now. But
shareholders still appear to believe he should be given the
chance to prove himself again.

"He's earned enough market respect to have the opportunity to
correct this," said Benjamin Wallace of investment firm Grimes
& Co., a longtime shareholder that sold its JPMorgan shares
six months ago.

"I don't think anyone else can do a better job than him, and we
would not be calling for his ouster," Wallace said.

Dimon said on Sunday that the bank had "made a terrible,
egregious mistake" and that there was "almost no excuse for it."

Yet there have been no signs of a shareholder insurrection
against Dimon, and no member of the board of directors has spoken
out against him since he disclosed the loss.

He still holds a reputation as the man who restored Bank One to a
profit a decade ago when few thought it was possible and who kept
JPMorgan Chase profitable through the financial crisis by
managing its risk.

And while $2 billion was a stunning figure, as the investor
reaction demonstrates, JPMorgan is more than big enough to absorb
the loss. The bank made $19 billion last year alone.

"Banking is a people business, and people are going to make
mistakes," said Steve Shafer, chief investment officer of the
hedge fund Covenant Global Investors in Oklahoma City, which
bought JPMorgan shares on Friday.

"If anything, this just reveals how difficult it is, with some of
the smartest hedgers on the face of the earth, to interpret what
the markets are going to do," he added.

Dimon has said the bank lost the money in a strategy to hedge
against financial risk, as banks often do, not because it was
trading for its own profit. Some lawmakers have cast doubt on
that portrayal.

JPMorgan's disclosure has led lawmakers and critics of the
banking industry to call for stricter regulation of Wall Street.

On Monday, President Barack Obama said JPMorgan's loss in
high-risk trading shows the need for the Wall Street rules that
Congress passed two years ago.

JPMorgan "is of the best managed banks," Obama said during an
appearance on ABC's "The View," a daytime talk show. "You could
have a bank that isn't as strong, isn't as profitable, making
those same bets and we might have had to step in. Which his
exactly why Wall Street reform is so important."

Many post-crisis rules governing risk-taking by banks are still
being written.

Among them is the so-called Volcker rule, which would block banks
from trading for their own profit, a practice known as
proprietary trading. Dimon has said the trading in question would
not violate the rule.

On Monday, Sen. Tim Johnson, D-S.D., chairman of the Senate
Banking Committee, announced additional hearings on financial
regulation and said he expected the JPMorgan loss to be
discussed.

Four days after Dimon announced the trading blunder, the
executive responsible for trading strategy at JPMorgan, one of
the highest-ranking women on Wall Street, became the first
casualty.

The bank said that Ina Drew, 55, the chief investment officer for
the bank and a 30-year veteran of the company, would retire and
be replaced by Matt Zames, an executive in JPMorgan's investment
bank.

Dimon said Drew's "vast contributions to our company should not
be overshadowed by these events." He stressed that the company
remains "very strong."

"We maintain our fortress balance sheet and capital strength to
withstand setbacks like this, and we will learn from our mistakes
and remain diligently focused on our clients, who count on us
every day," Dimon said.

JPMorgan is holding the meeting in Tampa partly because the bank
is expanding in Florida. Dimon will address shareholders, who
will get to ask questions.

They will also vote their approval or disapproval of his $23
million pay package from last year. The vote is non-binding, and
Dimon is unlikely to lose it. The overwhelming majority of votes
were probably locked in before the meeting.

Not all shareholders are squarely behind him. An influential
union, the American Federation of State County and Municipal
Employees, wants Dimon to be stripped of his chairman's title,
which he holds in addition to being CEO.

"The stakes are too high to leave Jamie Dimon unsupervised," said
Gerald W. McEntee, trustee for AFSCME, which owns JPMorgan shares
through its pension plan.

James Rickards, author of "Currency Wars: The Making of the Next
Global Crisis" and a partner in JAC Capital Advisors, a New York
hedge fund, has called for him to resign as CEO.

JPMorgan has access to funding from the Federal Reserve at an
interest rate of almost zero and lends it out to people and
businesses at a higher rate, he pointed out.

"The money that his bank put at risk comes at the cost of
everyday Americans who are getting zero income on their savings
accounts, and Dimon should take the ultimate responsibility,"
Rickards said.

Bank annual meetings have been intriguing affairs since the 2008
financial crisis, almost always attended by placard-wielding
protesters.

And consumer advocates usually show up to air grievances against
the bank's handling of its activities including foreclosures,
credit card debt, and overdraft fees.

But an anti-Dimon revolt is unlikely Tuesday in Tampa.

"Yes, it happened on his watch, and he is eating humble pie,"
Holland said. "But I have seen lots of bank CEOs come and go, and
even after a $2 billion fiasco, Dimon is one of the best."